North American Industry Classification System - NAICS

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DEFINITION of 'North American Industry Classification System - NAICS'

A new business classification system developed through a partnership between the United States, Canada and Mexico. This system allows statistics to be compared for all business activity across North America. All companies are separated into industries defined by businesses that use similar production processes.

The NAICS was created to replace the U.S. Standard Industrial Classification (SIC) system to modernize it, so that it would be able to relate to the constantly changing economy. The new system also allows for better comparability between all North American countries, which is important because of the increased trade between NAFTA countries. To ensure that the NAICS will be able to keep pace with changing economic conditions it will be reviewed every five years.